Deals Will Continue Despite Market Apprehension Contents Include
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AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY www.christiecorporate.com hotelfocusCorporate hotel news from Christie + Co Spring 2008 “Although the current economic climate has caused considerable apprehension in the hotel market, trading fundamentals are still strong, with reports of encouraging occupancy levels and growth in RevPAR. Christie + Co brokered a number of notable transactions in the first few weeks of the year, proving that buyers are still keen to complete deals — as long as the price is right,” says Director & Head of Hotels, Jeremy Hill. Deals will continue despite market apprehension Contents include Owners they are a changing for Amsterdam hotel 2 RREEF banks on Four Pillars deal for future growth 3 Menzies Hotels acquires Thistle package 5 Investing in the development of an even stronger team 6 Christie + Co increases presence in France 9 JER Partners goes that little bit further with Christie + Co 10 A tale of two cities 11 German market set 2007 was a story of two halves for the hotel Having witnessed impressive growth in average for interesting year 12 property sector. The continued “wall of money” hotel property values at the beginning of 2007, was the theme during the first half of the year, values softened towards the end of the year as Christie + Co takes the with many sources of equity and debt, and transactional activity slowed. Whilst this may Express route 14 demand for hotel assets significantly outstripping sound disappointing, it is worth noting that we Taking our intelligent approach supply. Prices boomed and yields fell to recorded a positive increase, not a fall in hotel onto the international stage 16 unprecedented levels as investors simply values during 2007. Analysis of our own hotel sales couldn’t get enough hotel sector assets. showed that average prices moved forward by Christie + Co 6.1% across the year as a whole. enters Scandinavia 17 During the final few months of the year, the effects of the crisis in the US sub-prime mortgage market In our general discussions with hotel operators started to become evident. As concerns about the and investors, the recent sentiment that has come cost and availability of debt prompted purchasers across is one of apprehension. to seek more competitive prices for hotel assets, we started to see a smoothing of price levels. continued on page 2 www.christiecorporate.com AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY Market Intelligence Deals will continue by Jeremy Jones, despite market Director of Corporate Hotels apprehension continued from front Owners they are a changing A number of deals have been set in a holding pattern by the instability in the financial markets for Amsterdam hotel and are currently waiting to land/complete. New supply is also currently benign, with a current “wait and see” attitude preventing owners from Acting on behalf of Apollo Real Estate Advisors, Frank Croston, consultant for Hamilton, said: presenting their assets to the market. Christie + Co sold the stylish Dylan Hotel in “After taking over direct management of the Amsterdam for an undisclosed sum to a Dylan in 2005, we improved trading significantly, However, trading fundamentals in almost all confidential buyer. adding substantially to profitability within the major European hotel markets remain strong, first 12 months. with significantly above-inflation growth in Apollo acquired the 41-room hotel in 2003. RevPAR continuing unabated throughout 2007. It was originally launched as a Blakes Hotel “The initial improvements were subsequently The outlook for hotel trading across Europe in 1999, before being renamed as the Dylan consolidated leading to substantial improvements remains good, with many markets enjoying two years later. in EBITDA, allowing Apollo to optimise its RevPAR and profit growth well into double sale price.” digits year-on-year for 2007, with the same The company appointed Hamilton Hotel Partners, expected for 2008. the London-based advisory firm, in 2004 to asset Hamilton also asset manages the Fairmont manage its investment and then to directly St Andrews Hotel in Scotland, and manages There is still debt available to fund transactions manage the hotel in the middle of 2005. the Gran Hotel La Florida in Barcelona on and there is also plenty of private capital. While behalf of Apollo. highly leveraged “mega-deals” are most likely to The property, which is located in a 17th century be affected by the credit crisis, single asset deals building in the centre of the Dutch capital, and smaller portfolio deals are still deliverable, recently had its ground floor refurbished and, albeit at potentially higher finance costs, and since Hamilton took over direct management in with less leverage being available. 2005, has seen EBITDA improve substantially. The ongoing demand for quality assets will help ensure that we continue to witness significant deals during 2008. There will be fewer sales by the major hotel companies this year due to the fact that they have very little left to sell. However, good quality, well located hotel property will still be highly sought-after by a variety of buyers, and this combined with possible solutions to the “credit crunch”, will push prices forward during the latter half of the year. We believe that further deals will follow as investors regain their confidence. 2 Christie + Co brokers St Helens sale for Hilton by Jeremy Jones, Director, Corporate Hotels Four Pillars Hotel, Tortworth Court RREEF banks on Four Pillars deal for future growth by Dan Griffiths, Director, Investment Christie + Co sold the Four Pillars Hotel Group Under the terms of the deal Brian Murtagh, to RREEF Real Estate, the global investment Four Pillars’ founding director, and Charles management business of Deutsche Bank’s asset Holmes, the group’s chief executive, retained a management division, for an undisclosed sum holding in the group. In addition, a joint venture in the region of £120 million. was established between RREEF and the four Christie + Co acted for Hilton Hotels in the sale original founding shareholders of Four Pillars to of the purpose-built, 84-room Hilton St Helens in We were originally instructed to sell the identify and build further sites, which will be Lancashire to WG Mitchell, the Edinburgh-based company’s hotel portfolio, which is spread operated under the Four Pillars banner. property group. across Oxfordshire and Gloucestershire, on a sale and manage-back basis. However, we received The joint venture has already been awarded A full and open marketing campaign generated interest from a number of private equity planning permission to develop its first new high levels of interest and we received a number investors who were keen to acquire the entire hotel in Harwell, Oxfordshire and has a number of offers for the hotel, which was available on Four Pillars Hotel Group, including its head office of other sites in the pipeline. an unencumbered basis. operations and development pipeline of two additional sites. Alistair Dixon, chief executive, real estate The deal was agreed with WG Mitchell for a opportunity funds at RREEF, said the group figure in excess of the original guide price. The company was ultimately acquired by intended to build a “substantial” portfolio The sale of the property confirms that the market RREEF Real Estate, marking Deutsche Bank’s through Four Pillars in the UK. for well located hotels remains strong. We were first investment in the UK hotel market. particularly pleased that our marketing campaign RREEF Real Estate has made an astute strategic generated substantial, well funded offers and that purchase. They have cleverly chosen to enter an the eventual sale surpassed initial expectations. undersupplied section of the market, which will provide them with a platform for future growth. WG Mitchell has granted Rezidor SAS a management contract for the hotel, which was purpose-built in 1992 and is located close to the North West motorway network. Rezidor plans to operate the hotel under its budget, full-service, Park Inn brand. The property, which includes a wide range of conference, meeting and banqueting areas, Four Pillars Hotel as well as a fully equipped leisure club, has reported high occupancy levels for both mid-week corporate trade and weekend leisure guests. 3 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY Stratford Market Intelligence Victoria sold by Ken Simms, Director to QHotels Hotel du Vin acquires by Dan Griffiths, Director, Investment St Andrews property We were confidentially instructed to market the The group will open its next property in Poole, 22-bedroom St Andrews Golf Hotel on behalf of Dorset, at the end of May. It will be followed by Joe Headon, chairman of St Andrews Golf Hotel further openings this year in Newcastle and Ltd, at the end of October. Edinburgh. A Hotel du Vin is also scheduled to open in Chester in 2009. The hotel occupies a prominent position on The Scores in St Andrews, and overlooks Founded in Winchester in 1994, Hotel du Vin St Andrews Bay. currently has properties located in Birmingham, Brighton, Bristol, Cambridge, Cheltenham, It comprises two function rooms, the Number Glasgow, Harrogate, Henley-upon-Thames, Forty restaurant, the Number Forty cocktail bar, Tunbridge Wells, Winchester and York. and the Ma Bells bar. Hotel du Vin Ltd was acquired by Marylebone Last year we were instructed by a long standing Hotel du Vin, which currently operates a portfolio Warwick Balfour in October 2004. MWB is a client to market the freehold interest in the of 11 hotels, acquired the property for an public company quoted on the London Stock Stratford Victoria Hotel in Stratford-upon-Avon, undisclosed sum. Exchange, which also owns the Malmaison Warwickshire. Group of hotels. The 102-room property was marketed subject Each hotel boasts its own unique location, be it to an ongoing management contract with townhouse, brewery, warehouse or renovated Marston Hotels.